The Growing Cost of Aging

With the election looming, we’ve heard a lot of rhetoric about healthcare. Rising costs, limited access, reforming Medicare…the list goes on and on.  Whatever happens on November 6, it seems the American public has already spoken. According to new research just unveiled at the American Public Health Association’s Annual Meeting, the cost of lifestyle drugs now exceeds the cost for medications used to treat chronic disease.

The research suggests that medicines used to treat conditions considered a normal part of aging, including those related to hormone replacement therapy, sexual dysfunction, menopause, aging skin, hair loss and mental alertness, are becoming so popular that they now rank third.  Only diabetes and high cholesterol have a greater cost impact among commercially insured patients.

Researchers at Express Scripts in St. Louis looked at trends in prescriptions filled for aging medications.  In 2011 alone, the cost per person for aging medications ($73.30) was 16% greater than the amount spent on both high blood pressure and heart disease medications ($62.80).  The cost for diabetes medications was $81.12 and high cholesterol medications was $78.38.

The research found that among these insured individuals use of drugs to treat the physical impact associated with normal aging was up 18.5% and costs increased nearly 46% from 2006 to 2011. Increased use of these drugs was even more pronounced for the Medicare population (age 65+), up 32% from 2007 to 2011. The largest utilization jump among Medicare beneficiaries was from 2010 to 2011, up more than 13% and outpacing increases in the use of drugs for diabetes, high cholesterol and high blood pressure combined.

At a time when people are forgoing care due to rising health costs, this study reveals a growing trend on where the public is placing its healthcare dollars,” said Reethi Iyengar, PhD, researcher at Express Scripts.  “Continued monitoring and potential management may be warranted for this category of medications.”

While there is no doubt that pharmaceutical advances and greater awareness have improved the quality of life for many aging Americans what was not known, until now, is the significant cost associated with treating these conditions. Couple that with the proliferation of people living longer and it’s clear that managing the trend and spend from treating conditions associated with aging will become increasingly important.

The United States is in the midst of a profound demographic change, with the number of elderly people projected to reach nearly 20% of the entire population by 2030, up from less than 13% in 2009. This increase will continue to drive both use and costs of medications to treat the natural conditions of aging.

But the problem may be even bigger. The greatest growth in cost per insured was seen among the 45 to 54 age group – up almost 21% over the last five-years. And because the study only analyzed prescription medications it may have underestimated the total costs of aging treatments, which include a variety of over-the-counter medications, cosmetic treatments and surgery.

Seems getting old hurts not only our bodies, but our wallets and the economy too.

20/20 on the Vanishing American Hospital

Most Americans are born in hospitals. Hospitals also provide care during many other intimate and extraordinary circumstances in our lives – serious injuries, severe sickness and mental breakdown. Hospitals are also, by and large where we go to die.

As such, hospitals serve as a cornerstone of our communities and our very existence.

According to the American Hospital Association, there are 5,754 registered hospitals in the U.S. In 2011, almost 37 million people were admitted to a hospital in the U.S. – that’s more than 1:10 people.

Yet despite all this history, hospitals are in the midst of massive and disruptive change.

Even knowing this, SRxA’s Word on Health was shocked to read an article suggesting that by 2020 one in three hospitals will close or reorganize into an entirely different type of health care service provider.

Writing on, a leading physician voice blog, authors David Houle and Jonathan Fleece suggest that that there are four significant forces and factors are driving this inevitable and historical shift.

First, America must bring down its crippling health care costs. The average American worker costs their employer $12,000 annually for health care benefits and this figure is increasing more than 10 percent every year. U.S. businesses cannot compete in a globally competitive market place at this level of spending. Federal and state budgets are getting crushed by the costs of health care entitlement programs, such as Medicare and Medicaid. Given this cost problem, hospitals are vulnerable as they are generally regarded as the most expensive part of the delivery system for health care in America.

Second, statistically speaking hospitals are just about the most dangerous places to be in the United States. Three times as many people die every year due to medical errors in hospitals as die on our highways — 100,000 deaths compared to 34,000.

The Journal of the American Medical Association reports that nearly 100,000 people die annually in hospitals from medical errors. Of this group, 80,000 die from hospital acquired infections, many of which can be prevented. Given the above number of admissions that means that 1 out of every 370 people admitted to a hospital dies due to medical errors.

In other words, hospitals are very dangerous places.  It would take about 200 747 airplanes to crash annually to equal 100,000 preventable deaths. Imagine the American outcry if one 747 crashed every day for 200 consecutive days in the U.S. The airlines would stand before the nation and the world in disgrace.

Currently in our non-transparent health care delivery system, Americans have no way of knowing which hospitals are the most dangerous. We simply take uninformed chances with our lives at stake.

Third, hospital customer care is abysmal. Recent studies reveal that the average wait time in American hospital emergency rooms is approximately 4 hours. Name one other business where Americans would tolerate this low level of value and service.

Fourth, health care reform will make connectivity, electronic medical records, and transparency commonplace in health care. This means that in several years, and certainly before 2020, any American considering a hospital stay will simply go on-line to compare hospitals relative to infection rates, degrees of surgical success, and many other metrics. Isn’t this what we do in America, comparison shop? Our health is our greatest and most important asset. Would we not want to compare performance relative to any health and medical care the way we compare roofers or carpet installers? Inevitably when we are able to do this, hospitals will be driven by quality, service, and cost — all of which will be necessary to compete.

So hospitals are about to enter the open competitive marketplace. And as we know there will be winners and losers.  According to Houle and Fleece a third of today’s hospitals will fall into the latter category.

Will your hospital be among them?  Let us know what you think.

The provider will see you now!

Back in the days when I was training, medical students had to study Latin in order to achieve fluency in the language of medicine.  Today, it seems, doctors are learning an entirely new lingo consisting of buzzwords and business speak! According to Pamela Hartzband and Jerome Groopman, two Harvard Medical School / Beth Israel Deaconess Medical Center physicians, current healthcare reforms mean that hospitals are becoming factories and clinical encounters are becoming little more than economic transactions. Writing in the latest edition of the New England Journal of Medicine they claim that, “Patients are no longer patients, but rather ‘customers’ or ‘consumers’. Doctors and nurses have transmuted into providers.” The combination of the ongoing economic crisis and efforts to reform the health care system have resulted in many economists and policy makers proposing that patient care should be industrialized and standardized and that hospitals and clinics should be run like modern factories.  At the sane time, archaic terms like doctor, nurse and patient are being replaced with terminology that fits this new order. In the process, the special knowledge that doctors and nurses possess and use to help patients understand the reason for and remedies to their illness get lost in a system that values prepackaged, off-the-shelf solutions. “Reducing medicine to economics makes a mockery of the bond between the healer and the sick,” they write. Hartzband and Groopman say the new emphasis on ‘evidence-based practice’ is not really a new phenomenon at all. ‘Evidence’ was routinely presented on daily rounds or clinical conferences where doctors debated numerous research studies. Back then, the exercise of clinical judgment, which permitted the assessment and application of data to an individual patient, was seen as the acme of professional practice. Now, health policy planners, and even some physicians, contend that clinical care should essentially be a matter of following operating manuals containing preset guidelines, like factory blueprints. Even more troubling, the authors suggest, is the impact of the new vocabulary on future doctors, nurses, therapists and social workers who care for patients. “Recasting their roles as providers who merely implement prefabricated practices diminishes their professionalism. Reconfiguring medicine in economic and industrial terms is unlikely to attract creative and independent thinkers.” When we are ill, we want someone to care about us as people, rather than as paying customers. Despite the lip service paid to ‘patient-centered care’ by the forces promulgating the new language of medicine, their discourse shifts the focus from the good of the individual to the exigencies of the system and its costs. Should we celebrate the doctors whose practices maximize profits or those who show genuine concern for their ‘customers’ or better still patients? Let us know what you think.

From Silver Ball to Silver Tsunami

2011 marks yet another milestone for America’s Baby Boom generation, one they are not likely to welcome.

It’s estimated that there were 76 million Americans born between 1946 and 1964, meaning the first of the baby boomers will turn 65 this year, and the rest won’t be far behind.. Analysts predict the number of people age 65 and older will double between 2010 and 2050. During the same period, the number of those 85 and older will increase four fold.

No wonder it has been dubbed the “Silver Tsunami.”

According to urban legend, baby boomers are associated with a rejection or redefinition of traditional values; privilege, as many grew up in a time of affluence. As a group, they were considered the healthiest and wealthiest generation and amongst the first to grow up genuinely expecting the world to improve with time.

Now the boomers are getting old, people are asking: will the country be ready to meet their extraordinary medical and social needs?

The answer, according to geriatric experts at the University of Alabama at Birmingham, is no.

As time passes and the boomers continue to age, they will need specialized geriatric care from specialized health care professionals in specialized facilities.

National estimates cite approximately 7,000 geriatricians currently certified to care for the rapidly growing boomer population,” said Richard Allman, M.D., Professor and Director of the UAB Division of Gerontology, Geriatrics and Palliative Care. “Yet our society will need more than 20,000 geriatricians to accommodate the increasing demand for specialized care.”

And it’s not just doctors.  Allman, who is also director of the Birmingham/Atlanta Veterans Administration Geriatric Research, Education and Clinical Center (GRECC) and the UAB Center for Aging, says the need for specialized caregivers for geriatrics extends beyond physicians to include nurses, therapists, dietitians, social workers and community caregivers.

And these are the boomers we’re talking about – traditional models of old age just aren’t going to cut it. Andrew Duxbury, M.D., a UAB geriatrician, suggests that the average boomer who reaches 65 in reasonable health will live into their 80’s or early 90’s, and more importantly, remain healthy and active well into their 80’s.

The boomers have always gotten what they want when they want it, with the demographic numbers to push society to accede to their demands,” he says. “They are not a generation to sit back and let history roll over them. They’ll go out and make their own history.”

He suggests that demand for such things as joint replacements, medications to improve aches and pains of aging and bypassing of clogged arteries will all skyrocket. Duxbury says the boomers will want the system to work around them and their active lifestyles and will not put up with all-day visits to the doctor. They won’t be sitting around playing shuffle board at the retirement center.

The boomers, with their health and vitality relatively intact into older age, will completely change how Americans conceive of what it means to be old,” Duxbury points out.

Allman says there is no public policy issue of greater importance than aging, nor one that is more ignored.

And there is work to be done in other fields besides medicine. Architects and engineers will need to design products, buildings and transportation facilities that are appropriate for an aged society. Educators will need to plan how to train people in mid career to do new tasks and use new technology in order to be affective workers. Businesses are going to need older workers to keep their enterprises going.

The last boomer will not die until sometime around 2080” says Duxbury. “They will be with us a long time.

So, whether you’re a boomer, or involved in planning healthcare for the aging boomer generation, SRxA’s Word on Health would love to hear your radical ideas on how best to address this issue.

Prescription Abandonment

You get sick, you go to the doctor, he or she writes you a prescription for some pills, you take it to the pharmacy and then…   Logic would suggest that the next steps would be that you pick up the prescription, take the medicine and get better.

Well, not always.  According to a new study published in the Annals of Internal Medicine almost 2% of these prescriptions are never picked up.

Using databases from a large retail pharmacy chain and a pharmacy benefits manager, researchers examined factors associated with prescription abandonment over a 3-month period.

Unsurprisingly, drugs with high copayments are the most likely to go unclaimed.  Prescriptions with copayments of $40 to $50 and prescriptions costing more than $50 were 3.40 times and 4.68 times more likely, respectively, to be abandoned than prescriptions with no copayment.

In addition, electronic prescriptions were 1.6 times more likely than non-electronic prescriptions to be left behind, and new prescriptions were almost three times more likely to be abandoned than previously filled prescriptions.

Interestingly, young adults were more likely than older patients to abandon their prescriptions, while opiates and anti-platelet agents were the least likely to be left behind.

Although the accompanying editorial called the low rate of abandonment “reassuring,” they suggest that physicians “remain mindful that costs are an important barrier to adherence and should aim to prescribe or recommend less expensive alternatives whenever feasible.”

SRxA’s Advisors can help pharmaceutical companies increase medication compliance and implement programs to lower the consumer cost of prescription drugs. Contact us today for more information.

Time for a new pharma paradigm?

If it ain’t broke don’t fix it!

But what do you do if it is broke? And what do you do if the “it” is healthcare and the “you” is the pharmaceutical industry?

The health landscape as we knew it has changed forever and the genie cannot be put back in the bottle. Industry has to adapt or die.

Industry leaders need to “fix” their sales model in response to the biggest threat the industry has faced since its inception. That threat is commoditization. On every side and in every country there is pressure to reduce prices, especially from governments who face increasing health costs from an aging population, higher expectations and improvements in technologies.

Pharmaceutical company success, like any other business, depends on its ability to acquire and retain customers.  Prescribing decisions are consolidating, there are more competitors, generics and ever-increasing regulations to contend with.  Change although difficult, is necessary.

The redesign of pharmaceutical field operations is probably one of the most strategically important and difficult tasks of senior executives.

In the late nineties two technology giants Xerox and IBM were facing similar structural market problems to the pharmaceutical industry. Both companies were producers of great technologies and manufactured market leading high tech products. Both had established and enormous manufacturing facilities and both companies were reliant on a huge and gifted sales force to create pull through for their products. Both companies were faced with the same problem.  Market entrants were selling similar products far cheaper, customer needs were changing as a result of the digital age and costs of production were too high.

Both companies took a similar view. They had to try and prevent the erosion of their sales base by adding more value to their customers and thus retain premium pricing. To do this both companies sought to move from selling product to selling “solutions”. This new model required dramatic and far reaching cultural changes to the company’s structure and strategies. Solution selling is not the same as product selling. Features and benefits are not part of selling a solution. A solution is a much broader concept it involves bringing together a combination of elements to solve a problem for the customer. In the solution world the term partnership has real meaning.

The Pharmaceutical Industry has to take the same route by providing more value to their customer. And there lies the problem. Industry is no longer able to focus its attention solely on the Clinician.  It is now the payers who call the tune and their motivations are very different from clinicians.

What do the payers want? Although the interest of the patient still lies at the core of their intent payers have twin objectives, the first, to implement government health policy and, the second, to ensure the availability of care within budgetary limits.

Payers are making demands within a changing industry, and in order to benefit from the shifting landscape, pharmaceutical companies must shift away from the traditional payer relationship and in its place, concentrate on how to add value to payers and managed care organizations.

As part of  payer-centric strategy, companies need to develop their value propositions.  Payers need to see a clear statement of the tangible results they will get from using your products or services.  At present, payers are unhappy with the information and models provided to them by life science companies. They are looking for more detailed information about the clinical studies conducted beyond safety and efficacy.  The provision of outcomes data and specific data showing the advantages of your products and service offering is needed.

Strong value propositions should offer tangible results such as

•  Decreased costs (admissions, tests, consultations etc)
•  Improved operational efficiency
•  Reduced patient interventions
•  Reduction in key health issues (obesity, smoking, cholesterol, alcohol consumption)
Together with a team of world class experts in Health Outcomes, SRxA partners with pharmaceutical companies to enhance their value proposition. SRxA can assist with brainstorming, market, customer and clinical research and pharmacoeconomics. The collated results form the basis for the prototype value proposition which is then rigorously tested. In this way a robust story can be developed for the sales teams, to give to the various “customer groups.”

Contact us today and you will have taken the first step to establishing your company as a marker leader in the new healthcare environment.

Drug Decisions

Hospital formularies identify the medications that can be used within a particular hospital. Which drugs are, and which drugs are not, available obviously have a significant impact on the quality and safety of patient care. As such, we would expect clinicians and pharmacists to utilize all available data when making decisions concerning medications for hospitalized patients.

Word on Health was therefore somewhat surprised by the results of a new survey just released by the Society of Hospital Medicine (SHM) and the American Society of Health-System Pharmacists (ASHP). According to their research, only 13% of formulary system decisions made by Pharmacy and Therapeutics (P&T) committees in hospitals are influenced by pharmacoeconomic data.

The survey of 319 directors of pharmacy or pharmacy practice managers evaluated the value of effects compared to the cost of pharmaceutical products when making decisions on changes to the formulary system.

In the study, 87% of respondents felt that pharamacoeconomic methods should be used when considering additions or deletions to their hospital formulary. However, when actually making formulary decisions, respondents reported that clinical and therapeutic factors contributed most to these decisions (54%), followed by drug costs (24%), and patient quality of life (9%).

Although, more than nine out of ten survey respondents reported having pharmacoeconomic analysis available during their most recent P&T committee discussion, only a quarter rated the available information as extremely helpful.

Pharmacoeconomics is all about balancing the costs of medications with the outcomes they provide and this survey pointed out that many P&T Committees underutilize this approach,” said SHM Chief Executive Officer, Laurence Wellikson.

The full report of the SHM-ASHP pharmacoeconomics survey can be found here.

SRxA and its team of specialized Health Outcomes  Advisors can help pharmaceutical companies collect and package pharmacoeconomic data in a meaningful and impactful way. Contact us today for further information.