A St. Patrick's Day View

From Contributing Editor Tony Doyle

St. Patrick’s Day commemorates the passing of the missionary who it is believed brought Christianity to Ireland in the AD 400’s. As with almost all holidays, the “fun” stuff has been added in later, leprechauns, the green everything, the pot of gold, the four leaf clover, the “luck” of the Irish Connie and I are both Irish, (her maiden name was Greene) but I don’t believe in luck. I don’t believe anything happens per chance. I believe in execution and deliverance. If I execute my marriage vows, I will be delivered from the woe that comes from a broken marriage. If I execute my duties as a father, I will be delivered from the sadness over the choices my children might make. If I execute my obligations as a friend, I will be delivered from the failure of those friendships. If I execute my work out and diet plan, I will be delivered from the average and the limitations that come with it. If I execute the practice of common sense, I will be delivered from the walk back of bad decisions. But, the words execution and deliverance have many meanings. The execution of Jesus Christ delivered me from my sin and secured my eternal soul. It’s all about execution and deliverance. Happy St. Patrick’s Day, I hope you are “lucky” enough to be delivered! God bless ya’ll!

Healthcare Facts and Fiction: What the General Public Needs to Understand About Healthcare in America. 

Understanding healthcare delivery, pricing, payment and business is a complex topic dissection. As such, we initially approached healthcare in a general fashion for Part I. Part II explained drug procurement and pricing. In Part Three we will explore the education, practice, and payment of physicians. Leave your pretensions at the door. It's not what most people think it is.... 

Part III: The doctor investment: time, education, licensing, expenses, and income.

He drove down the street in his new Cadillac, an annual spring automobile ritual for as long as you can remember. You also remember the garage to the house he pulled into. The one in the exclusive neighborhood. His wife gorgeous, his children in new clothes every season of every year. They bought the latest electronics, bicycles, and gadgets of all types. First in the neighborhood to have color TV. The family vacationed as regularly as the seasons changed. The life of a town doctor was self-directed, income steady and professionally rewarding. That was the 60s, 70s, and even into the 80's. The upscale life of most physicians is long gone along with autonomous and satisfying work. It's a tough way to make a living in 2018.

The Education and Cost:

An aspiring 18 year old future physician must first attend a basic four year undergraduate school typically majoring in biology, pre-med, or some similar life science based degree. This cost is widely variable so let's look at Lancaster County, Pennsylvania where there is a private Ivy League (Yes, Ivy League.) school and a state university. Franklin and Marshall is the private institution that will set you back $69,243 per year including tuition, fees, room and board. If eligible for grants the cost drops to $28,157 per year according to CNN Money (1). Either way it is four years and between $112,628 and $276,972. We will take the $276,972 as the cost as grants and scholarships are like the weather, unpredictable and uncertain. For state residents on a budget there is Millersville University where a four year degree, including in-state tuition, fees, room and board for state residents tolls in at $114,700 (1) pre-grants and scholarships.

Undergrad Cost: $114,700 at a state university and $276,972 at a private college.

Medical school is the next step for this now 22 year old hopeful physician. Here begins the real fun. First you must take the MCAT exam for a mere $315 and you must do well on it so you pay varying costs for prep classes and materials. The next fee faced is the American Association of Medical Colleges (AAMC) who will charge you $160 for your first medical school application submission and $39 for each additional school thereafter. Keep in mind there may be a secondary application fee of up to $200 demanded by the medical school. Additionally some colleges charge "... a small fee to forward your college transcript" (2). There will be a live interview, which means travel and probably an overnight stay to add to the cost.

Like undergraduate school costs, actual medical school tuition varies from in state to out of state. Let's say our above Pennsylvania student wishes for Harvard and the $53,581 per year price tag or Johns Hopkins for nominally less $47,284 annual tuition (3). Ok, the cost is too great so this student chooses Penn State University charging $41,860 yearly for in state residents. So that leaves us on the less expensive PSU Med School side at $167,440 and another four years of time and study.

Medical School Application Process and MCAT exam: $475 minimum to as much as $4000.
Medical School Tuition: $167,440.

The now 26 year old student is currently $282,615 in debt for a state resident attending a state university and a state medical school. Intern/Residency is the next educational step and not as financially destructive as undergrad and med school. This physician education phase lasts 3-5 years. The first year, usually known as PGY-1 (Post Graduate Year 1, sometimes known as the "intern year"), exists as a general introduction to all medical areas like emergency, obstetrics, internal medicine, general surgery, and orthopedics among many others. Our future physician then spends the next two to four years in their chosen area of practice. For example, cardio-thoracic surgery may require five years total residency while cardiology may be three years.) Our fledgling doctor wants to be a cardiologist so her residency is three years. All is not lost as she now is paid $62,000 per year with the average resident pay over all specialties listed at $57,200 (4). Sounds pretty good except this is for 60-80 plus hour work weeks that were much longer and more rigorous in years past. If you find a doctor over age 45 or so, you can bet they worked 100 hour or greater weeks routinely as residents.

Now 29 years old and not so young anymore, our student really desires the allure of the cardiac cath lab. That Interventional Cardiology job requires a Fellowship of, yes, four more years. Ok, now our student is ready to embark on her medical practice journey at age 33 and with probably a few more thousand dollars debt, especially if she married and became a mother. Let's round up to $300,000 debt in a very conservative number and best case scenario. The interest rate is 4.56% on the undergraduate loan, 6% to 7% for the graduate (med school) loan (6). While our intrepid doctor does not need to pay off her student loan principal yet, she will accrue interest from day one of her undergraduate loan so waiting to pay until after her fellowship is not in her best financial interests.

Fifteen years of Training 

Our student has taken exams, lots of exams to cross the physician finish line, but the biggest lies ahead:  Board exams. Initial internal medicine boards cost $1385 followed by interventional cardiology boards priced at $2905 for our young physician. Enter one of the more nonsensical situations facing physicians. To remain "boarded" physicians are required to sit for their respective boards every ten years (Family Practice is every seven years.)! There is a cost break at $650 for the internal medicine board exam and $1200 for all subspecialties. The option is a "knowledge check" for internal medicine every two years costing $150 ($650 over ten years) and $240 for all other subspecialties ($1200 over ten years). Additionally there is a maintenance of certification (MOC) annual fee of $155 per year for another $1550 over ten years (5). So for our newly minted interventional cardiologist it will cost $2200 for IM boards/MOC plus $2750 for interventional cardiology boards/MOC.

$4290 for initial board exams then $4950 for MOC/Boards every ten years

So why all the fuss over "Boarding?" Board certification becomes important based on insurance payments, the financial life blood of all medical practices and systems. Boarded physicians are usually readily accepted to "participate"meaning receive payment from an insurance company. An unboarded doctor down the street practicing the same medicine for the same time span who is not boarded may not be allowed to "participate". That means insurance companies can limit competition and control pricing more easily with fewer participating physicians. Insurance companies love this quirk as squeezing prices downward and paying less is always in their best interest. A currently boarded physician is more clinically astute and therefore worth more money remains both ABIM's and insurers' battle cry even though there is no objective proof this is true after initial boarding. There was and still is considerable push back from physicians to this entrenched money extracting policy by both insurances and ABIM. It is simply not feasible for most physicians to carve out the time to study and shell out after tax dollars to retake an exam every ten years. Fortunately there is the new ABIM, every two year knowledge check in lieu of the every decade year exam. There is no other profession requiring retaking board exams after initial passing. The norm is maintenance by verifiable continuing education units (CEUs). I did review the twelve top ABIM executives and found no overt, formal insurance company relationships, but that doesn't prove unequivocally their are none.

Board Certification exams are monitored and offered by ABIM (American Board of Internal Medicine), which is the governing umbrella for most MD physician (DOs have their own boards) board exams and certifications in America. ABIM turns out to be a very lucrative "gate holder" industry. From the ABIM website, fiscal year 2017 shows a $54.8 million budget of which 15% goes to administration and 6% to governance totaling $11,508,000. "Physicians working for ABIM earn $400,000 to nearly $1,000,0000 annually" and "It has been estimated ABIM receives approximately $4,000 for each [exam] test question it develops" (7). Great work if you can get it. Many physicians are no longer taking this financially extractive situation lightly. Currently over 22,000 doctors have signed a petition challenging ABIM and forming a new organization: National Board of Physicians and Surgeons (NBPAS) causing the new ABIM MOC/Board process change to include the new every two year knowledge check as a very contentious and open physician revolt expanded and still rages.

Fifteen years of training and I make what and pay $45,000 annually for malpractice insurance?

Physician pay isn't what it used to be.  Our interventional cardiologist is now 33 years old, at least $300,000 in debt, probably more, and has lost out on eleven years of true income producing work that many of her high school classmates with undergraduate degrees in science and technology enjoyed. Bluntly assessed, she has lost eleven years of earning time. Now the good news: the national average annual salary for interventional cardiology is $427,000 (8). For perspective a primary care internal medicine doctor sees $219,000 average annual pay with most internists under the $200,000 threshold (8). Our doctor's salary sounds good and it is good until you look at servicing her school debt, malpractice insurance, taxes, and office overhead including Electronic Medical Records (EMR).


Malpractice insurance for our interventional cardiologist who will now practice in Pennsylvania falls somewhere on the lower end of general surgery rates or about $45,000 annually (9). Again for reference, the general internist pays on average $21,500 annually and Pennsylvania has the second highest malpractice rates (Only NY is higher) in the country (9). Malpractice insurance rates are based on court payouts and PA is a terrific payout state. And taxes! The 2018 new federal income tax rates place our doctor solidly in the 35% tax bracket. Servicing a $300,000 debt at 6.00% (The probable interest rate on her loans as discussed earlier.) over twenty years means $2149 per month payment. And electronic medical records (EMR)! EMR is legally mandated for obtaining Medicare and Medicaid payments and will cost an exorbitant $25,000 if she is an "add on" to an existing system meaning she has partners already on an EMR system (10). If she is solo, which is cost prohibitive, the expense can reach $100,000 or more.

Medical professionals spend 55 cents of every earned dollar on overhead (9). Outside of the costs discussed, much of this is related to medical coding and billing, and meeting EMR requirements. Medicare and Medicaid represent about 16 million patients in the US with Heart and/or cardiovascular disease. Many health insurances are also pressuring EMR adoption with slower physician payments as the steady pressure to those not submitting bills electronically.

So Let's Work: Another $735 every two years for medical licensure and $731 every three years for a DEA License

Yes, the medical doctor in our example must also obtain specific state mandated CMEs plus CMEs of choice to total 50 every single year to maintain an unrestricted Pennsylvania state medical license. More time and sometimes more money. Time to work....

Not so fast! Enter the insanely labyrinthine insurance credentialing process and individual state medical licensure craziness. A physician must have a National Provider Identification (NPI) number, a state medical license, a DEA number, and in some states a Pharmacy License. Credentialing is the process whereby the physician must fill out a grossly long (about 25 pages), nonsensically complex and laborious questionnaire so the physician may "take part" with a specific insurance. Oh, and she will get to perform this unbelievably silly exercise for every insurance company she wishes to participate with: code for "paid for her work and told what her work is worth, not what she charges". Insurance companies love dragging their feet in what seems an exercise in asserting dominance. The entire licensing and credentialing process can take 3-6 months and sometimes longer. Pennsylvania does not list its costs and time for medical licensure but adjacent NY does: $735 and 8-12 weeks.

If the physician moves from 10 Main Street to 12 Main street, guess what? They get to redo the entire tortuous credentialing process again based on a simple address change. One can only look at this situation and wonder why anyone would want to become a doctor in the United States. Insurance controls the industry at the political level (Medicare Part D and ACA are the most recent examples) and the provider level (Insurances "negotiate" what doctors will be paid and hold the right to deny physician payment or lower it.). Free market? Hardly.

Many of these year to year  practice expenses like malpractice insurance, EMRs, re-boarding and licensing can be mitigated if the physician decides to join a hospital/health care system. The trade off is a lower salary for less initial financial output and ongoing medical business headaches particularly in the coding and billing realm.

The final tally: 15 years and approximately $375,868 in debt to join a private practice or start a practice with some other newbies, or $300,000 to become a health system employee. Forget a solo practice as it is cost prohibitive. Return On Investment may be minimal or negative based on physician life span and uncertain future medical system legislative changes. Don't forget the long hours, call time (Anyone out there like being awakened in the middle of the night, weekends, holidays?), and other myriad regulations not mentioned in this short article.

Keep in mind this is a general example and there are many variations and considerations. Inclusive information would take volumes. The salient points: Becoming a doctor is expensive in money, time, and bureaucratic red tape. Financially extractive policies exist throughout boarding and licensing for the doctor to remain legally qualified to work. Insurance controls healthcare.

We haven't covered the AMA, coding and billing, insurance price negotiations, insurance care directives, and other health insurance industry shenanigans. They await in Part IV...

(1) https://money.cnn.com/tools/collegecost/collegecost.htm

(2) https://students-residents.aamc.org/financial-aid/article/the-cost-of-applying-to-medical-school/

(3) http://medical-schools.startclass.com/compare/24-70/Harvard-Medical-School-vs-Penn-State-Milton-S-Hershey-Medical-Center-College-of-Medicine

(4) https://www.medscape.com/slideshow/residents-salary-and-debt-report-2017-6008931#9

(5) http://www.abim.org/maintenance-of-certification/moc-faq/moc-fees.aspx

(6) https://www.accesslex.org/xblog/2017-2018-interest-rates-announced

(7) http://bilhartzmd.com/?p=1010

(8) https://www.glassdoor.com/Salaries/interventional-cardiologist-salary-SRCH_KO0,27.htm

(9) https://www.gallaghermalpractice.com/blog/post/how-much-does-medical-malpractice-insurance-cost

10) https://www.usfhealthonline.com/resources/.../electronic-medical-records-mandate/


(11) https://medicushcs.com/physician-licensure-application-fees-and-timelines-by-state/



Observations with Mark Krug, Contributing Editor


Extremism and Truth


I am always amazed how many people do not think the very things they love are systematically destroying us. We have become so accustomed or desensitized to “normal”. I look at exercise over the past few decades and look at how extreme it has become. We even have exercise games on TV as competitions. For exercise to effective, do we really need crawl through mud filled tunnels, walk across fire, shocked and/or run 5 miles while zombies are chasing us? Once again, we have gone from sensible to extreme.



This extremism has even crept into our weather reports. In years gone by we had “approaching storms”,  “a chance of snow” or “possibility of a thunderstorm”. For the past few years when a storm is rolling in, we hear “34 million people will be effected by this storm system”. We even have snow bombs, snow cyclones and polar vortexes and 24 hour weather channels. Have we become so blasé that we need these types of terms to gain our attention to the weather?



We also seem to have this insatiable appetite for quick everything. The problem is then expect a quick response. A quick response rarely lends time to think through the whole situation. Have we lost the ability to think? Do we just tend to find articles, or read just the part we agree with, and then take that as the gospel? My father taught me that math is important for more than just equations. It teaches us a logical process for thought. So maybe algebra was important but not for the actual equations.

The left is in love with Hollywood and the music industry. Yet we can argue that those two industries alone have destroyed much of the morality of this country. When it comes to violence, they also lead the way and now want none of the blame or responsibility. As usual, everyone wants all the rights without any of the responsibilities.

   

In movies, video games and other forms of media you get to see glorified, graphic real life rapes, murders and other violent crimes and gamers can even be rewarded for committing such atrocities in video games.  Take some time to read some of the books written by Lt Col Dave Grossman. If you think guns alone are the problem I will go ahead and say it, you are uninformed and I suspect not all that interested in the truth.



Stop protecting and focusing on your own little corner of the world and look bigger to see the problems, the causes and the effects. Accept responsibility, lead courageously, reject passivity and focus on eternity.

Healthcare Facts and Fiction: What the General Public Needs to Understand About Healthcare in America 

Understanding healthcare delivery, pricing, payment and business is a complex dissection. In Part Two of this series we look at drug discovery costs, the FDA and how drugs and medical devices are priced. 

Part Two- Drugs and Devices

Who can forget the tale of Martin Shkreli, Turing Pharmaceuticals and Daraprim? Approved by the FDA in 1953, Daraprim was the anti-parasitic drug used to treat malaria, and toxoplasmosis in all patients and more routinely recently for preventing and treating toxoplasmosis in HIV patients. Shkreli's company Turing Pharmaceuticals obtained the rights to the drug in 2015 and existed as the sole supplier of Daraprim. Turing promptly upped the price from $13.50 per pill to $750 per pill and Shkreli became fodder for then presidential candidates and the poster boy for all that is wrong with pharmaceutical prices, healthcare, and unbridled greed. 

Ah, drugs. America is awash in drugs. We are the most medicated populace on the planet with almost 50% of adults taking at least one prescription medicine in the past month according to the CDC (1).  The Brookings Institute's Hutchins Center (2) reports per capita drug spending at $1112 annually. Pharmaceutical costs continue leading healthcare costs higher to the tune of a 27% spending increase in 2017 (3).  

What discovering and developing new drugs and medical devices costs:

To understand drug costs you need understand the process of drug discovery through FDA approval and marketing. There are five specific steps required to bring any drug to market that spans approximately eight and usually many more years from the first human studies to FDA approval (4):

1. Discovery and Development- A molecule, protein, virus or other biological life form is identified along with its action or potential action in a given disease.

2. Preclinical Research/Phase I- This phase answers the question, "Is the drug safe for humans?"

3. Phase II- Efficacy and safety. Simply, "Does it work and is it safe?"

4. Phase III- Efficacy, safety, and side effects. "What is the best dose for maximizing benefit, minimizing side effects, and what are all the side effects?

5. Post Market Safety Monitoring- monitoring for side effects or therapeutic complications.

The FDA flow chart looks like this:

Keep in mind the entire process is approximately 8 years long in best cases and quite expensive. As in $2.5 billion expensive (5). Certainly this value is variable, but for the most part accurate. Add to that $2,421,495 for the FDA application fee with clinical data and another $304,162 program fee. And that is no guarantee the drug will be approved as approximately only one in ten are granted approval to proceed with sales and marketing. For medical devices the costs are extremely variable and the FDA process is more tortuous, yet much less expensive tolling at less than $1M in fees(6). Regardless, it remains expensive developing and testing a new drug or medical device.

How drugs get from the pharmaceutical company to the patient:

Pharmaceutical companies price their drugs based on many factors including development costs, potential market, competition, and what insurance companies, Medicare and Medicaid will pay. Factoring all variables together helps the drug company arrive at a price known as the list price. 

This is the specific point where drug pricing becomes convoluted. The list price is rarely paid. Insurance companies usually contract a pharmacy benefit management company (PBM) like CVS/Caremark or Express Scripts to handle the pharmaceutical portion of their business as do larger businesses and unions. The PBM negotiates the lower drug prices for the insurance company or business under contract. Here's how it works for a month's supply of Drug A:

Drug A's list price is $100

PBM negotiates the price to $60 and then charges the insurer or company $70 

The insurance company pays the $60 to the PBM but charges the patient a $10 out of pocket co-pay

The insurance company breaks even (cost neutral), The PBM grosses $10 and the patient pays $10 which doesn't sound too bad for the drug in this example. 

PBMs initially entered the medical arena to contract for better drug prices from manufacturers, reduce insurance spending, thus increasing medicine affordability. As drug prices increased new ways evolved to control costs. Most insurers/PBMs set formularies, which are simply a list of drugs they will reimburse. These formulary lists act as expense choke points. Certain rules may apply such as step therapy where a cheaper medicine must be used first and the patient must fail the therapy before a different (more expensive) drug is reimbursed by the insurer.  Another cost containment strategy is the tiered formulary structure. In a three tiered reimbursement formulary what this means is Tier 1 is the cheapest for the insurer and patient. Think generics and most older drugs. Tier 2 is reimbursed at a lesser amount by insurance and has a higher co-pay for the patient such as older branded drugs. Tier three are usually newer branded drugs and those not on the insurer's formulary with the patient picking up most or all costs. Another pivotal strategy is prior authorization (PA) where the physician submits for and receives permission from the insurer or PBM to prescribe a drug.

Three main issues with these cost containment strategies exist. First, the physician's clinical decision making is now secondary to whatever the insurance/PBM deems appropriate. Sometimes this is good and keeps the doctors thinking of the least expensive solution. Sometimes it flies in the face of the patient's clinical reality versus what insurance/PBM formulary decision makers want. The second issue is the patient has no say what drugs land on their insurance formulary. Last, but not least, is the responsibility for knowing the formulary structure and obtaining prior authorization (PA) rests on the physician and their ancillary office staff. This costs the patient face time with their doctor and costs the doctor's staff time sending and receiving PAs. A brilliant strategy by insurances/PBMs co-opting medical staff for drug price policing. For the medical community it is another overhead expense and time wasting mandated exercise. 

US drug prices vs. the world:

How does the US compare to other countries around the globe? In the first part of this series We mentioned the hepatitis C drug Harvoni costing $70,000 domestically versus $800 in Egypt. According to Reuters US drug prices are generally three times more expensive than England, six times higher than Brazil, and sixteen time greater than India. Why? Most countries negotiate pricing directly with drug companies resulting in better pricing. In 2006 the Medicare Modernization Act (MMA) was implemented after being signed into law three years prior. One of the unique provisos of the MMA prohibited Medicare from negotiating with drug companies for lower prices. Considering Medicare accounts for 30% of $360 billion total US drug spending in 2017, this seems either a gross oversight or is it something more? The 2000 election won by George W. Bush, 36% ($7.29 million) of pharmaceutical giving landed with Democrats vs. 69% ($18.63 million) for Republicans (8). By December 8, 2003 the Medicare Modernization Act was authorized but not yet implemented. Presidential election campaign contributions in 2004 saw 31% go to the Dems against 67% for the Republicans where GWB won his second presidential term. January 1, 2006 MMA was instituted and pharmaceutical companies enjoyed their payoff. At this time only the VA system negotiates pharmaceutical prices directly with companies and individual states may negotiate Medicaid prices only. 

Lastly, the total global pharmaceutical market in 2016 was $1.05 trillion of which $450 billion or roughly 45% is attributed to the US. Let's view this another way: America holds 4.4% of the global population and pays for almost half the World's medications (9).

Drug sales and marketing:

Drug representatives are the visible whipping posts for allegedly helping drive pharmaceutical sales and prices higher. Maybe not. Examining Johnson and Johnson we find these fiscal year 2015 numbers: 

 

     Total Revenue: $71.89 billion

     Advertising Spend: $30.12 million (0.04% of revenue)

     Research and Development Spend: $6.967 billion (9.69% of revenue)

NOTE: According to the corporate 2016 annual report on page 36 the number for Sales, Marketing and Administration is $19.945 billion (27.74% of revenue) (10). Unfortunately the sales and marketing numbers are co-mingled with the administration costs. Understanding a truer cost would delineate the sales and marketing costs alone and specify what areas such as sales, sales, print media advertising, television advertising, and digital advertising the specific spending occurred.

ALSO NOTE: J&J has a consumer division, a medical devices division and a pharma division. 

Sanofi is France's largest drug company and also a $40 billion global powerhouse. Their sales and marketing spending is reported at 3.1% of expenditures. When we compare pharmaceutical companies to the tech sector we find a range from 7% at Apple to 53% for Salesforce as seen in the below graphic from Sarah Brady at https://vtldesign.com/digital-marketing/content-marketing-strategy/percent-of-revenue-spent-on-marketing-sales/

From Sarah Brady at https://vtldesign.com/digital-marketing/content-marketing-strategy/percent-of-revenue-spent-on-marketing-sales/

The end result is variable, but this much is understood: the role of drug and device reps is a blip on the pharmaceutical cost radar, the reps bring new information to physicians who are grossly time starved. Lastly, no physician is paid by a pharmaceutical company to prescribe their drug(s). It is absolutely illegal. When looking for collusion and corruption the compass points upstream from physicians to the industrial- political complex. The saying, "Politics makes strange bedfellows," needs amending, "Politics takes on all bedfellows with cash." 

BARRIERS TO SUCCESS

1. The FDA drug and device approval process is slow and expensive. Streamlining the process is essential to decreasing the time and cost

Take away: It is expensive and time consuming to discover and develop new drugs (about $2.5 billion and 8 or more years. 

2. The US is arguably the most medicated country on the planet. 

Take away: Becoming healthier remains essential for each of us to enjoy less medical expenses and greater quality of life.

3. PBMs are an unessential layer of the patient's drug procurement pathway.

Take away: We are seeing the purchase/merger of insurances and PBMs, which should theoretically decrease patient drug costs. Hopefully we will see what streamlining looks like when Jeff Bezos and friends roll out their take on improving healthcare.

4. US patients subsidize global drug prices.

Take away: We can no longer afford to support the world's drug prices as the United States Empire crumbles and the American citizens continue losing economic ground.

5. The connection between congress, POTUS, insurance companies, drug and device companies is rife with quid pro quo relationships.

Take away: Abolish lobbyists. Congress needs to amend Part D to allow Medicare drug price negotiating rights. This is where Warren Buffett can make his influence felt as part of the Bezos, Buffett, Dimon troika. 

The nexus of Washington DC, insurance companies and pharmaceutical companies will be discussed in later segments of Healthcare Facts and Fiction: What the General Public Needs to Understand About Healthcare in America.  

Up next is a rousing romp through a physician's life. What it takes to become a doctor, obtain and maintain the various licenses to practice, rules, regulations, reimbursements, and daily life. Not for the feint hearted reader. 

(1) https://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm

(2) https://www.brookings.edu/blog/up-front/2017/04/26/the-hutchins-center-explains-prescription-drug-spending/

(3) http://www.ajmc.com/newsroom/americans-used-less-care-in-2016-but-healthcare-costs-still-soared-report-says

(4) https://www.fda.gov/ForPatients/Approvals/Drugs/default.htm

(5) https://www.scientificamerican.com/article/cost-to-develop-new-pharmaceutical-drug-now-exceeds-2-5b/

(6) https://www.fda.gov/ForIndustry/UserFees/MedicalDeviceUserFee/ucm452519.htm

(7) https://www.kff.org/infographic/10-essential-facts-about-medicare-and-prescription-drug-spending/

(8) Big Pharma Political Contributions - Drugsdb.com http://www.drugsdb.com/blog/big-pharma-political-contributions.html#ixzz57b6xuiGL

(9) https://www.statista.com/topics/1719/pharmaceutical-industry/

(10) https://jnj.brightspotcdn.com/88/3f/b666368546bcab9fd520594a6016/2017-0310-ar-bookmarked.pdf

Healthcare Facts and Fiction: What the General Public Needs to Understand About Healthcare in America 

Understanding healthcare delivery, pricing, payment, and business is a complex animal for dissection. As such, we will initially approach healthcare in a general fashion before deeply dissecting this topic in serial fashion. Today is the first in the series.

Part One: Why Amazon, Berkshire Hathaway, and JP Morgan Recently Announced Their Healthcare Experiment.

THE ISSUE

Last week the big reveal from Amazon, Berkshire Hathaway and JP Morgan Chase was announced with maximal fanfare that burned bright in the news cycle for an entire day. This business triumvirate announced their joining forces to create a healthcare company specifically aimed at reducing their respective domestic employee health costs. Currently, these three companies employ greater than 500,000 people in the US and over one million persons globally. With Amazon and Jeff Bezos's reputation for destroying brick and mortar stores, Warren Buffett's inside the beltway access to government and shrewd business moves and Jamie Dimon's financial behemoth stalking Wall Street, one would think great things to come. Outside of the healthcare sector investors sold off a bit on this news. The rest of us shrugged a collective "whatever". We've seen this play before. The powerful, entrenched characters running healthcare have persevered, even more powerful since the ACA passed. Those characters in order of power remain insurance, pharmaceutical, and medical device companies. 

WHO ARE BEZOS, BUFFETT AND DIMON?

"Why these three individuals at this time?" is the seminal question. We know our labyrinthine healthcare is expensive, stuffed with middle men, compliance costs, licensing issues, insurances, and gross overhead expenses few other businesses  endure. Starting with billionaire Jeff Bezos, known as a serious type A personality, retail industry disrupter, and sometimes a vulgar expletive, particularly when he uses the Washington Post as his propaganda mouthpiece or buys Whole Foods and turns it on its head. Yet Bezos is a master of streamlining supply chains, squeezing efficiencies, and reducing overhead by integrating technology and logistics. Oh, and he has been quietly investigating the pharmacy distribution business in several states over the past years making some pharmacy benefit managers (PBMs) a bit nervous.   

Octagenarian Warren Buffett brings his "grandfather  knows best" swagger with sayings like, "The ballooning costs of healthcare act as a hungry tapeworm on the American economy." The billionaire has a cult following amongst his shareholders where his annual open stock meeting plays to tens of thousands who make the pilgrimage to his home town Omaha, Nebraska. More importantly, he has the government's ear where he knows intimately how the system works. His father was a Nebraska senator, so he learned which arms to twist and how hard. His contacts run deep in D.C. 

Another billionaire, Jamie Dimon, chief executive of the largest U.S. bank, JPMorgan Chase & Company rounds out this audacious trio. He brings financial and business transactional clout as well as central banking experience and connections. He served on the BOD of the Federal Reserve Bank of New York. He rounds out an accomplished trio for this gargantuan task.

WHAT ARE THEY ATTEMPTING?

The three companies are forming a new company, “partnering on ways to address health care." From Jeff Bezos, “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.” Sounds far reaching and altruistic. Perhaps. Reducing overhead is not only a smart business strategy, which Amazon has followed religiously, but a necessary one for growth and continual success. 

The smile moment was reading the quote their new company would be “free from profit-making incentives.” From three billionaires this quote seems ingenuous and also unrealistic. Take away the incentive to attain material wealth through hard, smart work and the impetus for success diminishes. We've understood this historically from the original Plymouth Colony embracing a social economic philosophy and nearly perishing to witnessing current day Venezuela. "No profits" begs the question, "How is this system economically sustained?" A question without an answer thus far.

Make no mistake, this new company is about reducing healthcare cost overhead for the respective trio's current business interests. If they can achieve positive results on that scale then look for a national referendum via Amazon, Berkshire, and JPM-Chase utilizing their media power, lobbying networks, political insider relationships, and financial gravitas. Of course they will be integral parts of this system and its profits.

This is a daunting task with great risks. Certainly they will threaten and ultimately alienate certain customers of their respective empires as they gin up their new business entity. Just as certain they risk losing some business and profits while remaining beholden to their stock owners. They are not the first business giants to walk this path. AOL, Microsoft, and Intel with their respective leaders have all ventured into this space only to fail. Success depends on overcoming key hurdles like contracting directly with drug companies and eliminating the PBM or the pharmacy middle man to reduce prices and increase efficiencies.

BARRIERS TO SUCCESS

The keys to success are many. Some are simple, but most are horribly complicated. Numerous details are required for this project and success depends on several key pieces:

1. Insurance companies must be brought under control with concrete reimbursement policies. Far too many horror stories of unreasonably denied claims. This will be difficult as United Healthcare's 2017 revenue, "... exceeded $201 billion increasing more than $16 billion year-over-year. Operating cash flows grew to $13.6 billion..." quoting CEO David Wichmann. (His base salary is $1.1 million with $12.3 million total compensation.) Aetna's 2017 revenue was $60 billion with $1.9 billion earnings. (CEO Mark Bertolini made $41 million in 2016 and may walk from Aetna with $500 million if the CVS merger is realized.) 

Take away: health insurance is lucrative with a legislated customer base via ACA. 

2. Medical care needs price transparency. Very few people inside healthcare know what procedures and care cost based on varying insurance reimbursements to providers and healthcare systems. It is a convoluted, confusing, and downright diabolical system like health insurance legislated (aided and abetted) by our friends in government. 

Take away: Warren Buffett knows insurance as GEICO is wholly owned by him through Berkshire-Hathaway. As stated earlier, Warren knows the DC insider shuffle, so if anyone can develop an insurance product for less he can. He can also garner legislative support through various lobbying groups.

3. Drug costs need to decrease. Americans don't realize they subsidize much of the globes' medicines. Country specific pricing is based on GDP wealth and how well individual countries negotiate prices. Why should Harvoni for Hepatitis C cost $70,000 for a treatment course in the US and $800 in Egypt?Americans are no longer "rich" as the middle class faces extinction through high debt, high taxes and fees, minimal savings (CNBC cites 69% of Americans with less than $1000 and 75% with less than $10,000 savings.) and almost non-existent wage increases (calibrated for inflation) over the past forty years. 

Take away: The American consumer is tapped out. Consumer credit card debt is greater than $1,000,000,000,000; student loan debt is greater than $1,300,000,000,000; $8,690,000,000,000 stands in home mortgage debt. 

4. Implement immediate FDA reform. Why are pharmaceuticals leading per capita healthcare spending higher? (According to the 2016 Health Care Cost and Utilization Report that examined the per-person health care spending for employer-sponsored insurance members at from Aetna, Humana, Kaiser, and UnitedHealthcare.) One of the major hurdles is a slow, inefficient FDA. Currently it costs a drug company approximately $2,000,000,000 to develop a drug and get it passed by the FDA. Pharmaceutical manufacturers frequently cite the FDA as a significant portion of this price. This situation also exists for medical devices and the FDA.

Take away: It's the government. Get out of the way.

5. Move healthcare transactions and information to blockchain technology to prevent fraud of all sorts and ensure patient medical record privacy free from hacking.

Take away: Blockchain is the answer for clear transactions and patient privacy.

6. Everyone is free to choose, whether too much food or drink, motorcycle riding without a helmet, no seatbelts, drug use, smoking, and other risky behaviors. No problem. Have at it, but no more expecting healthy people subsidizing your bad choices. It's time to truly subsidize healthy choices and well care. Fortunately we are seeing movement in this area.

Take away: Individuals need pay for their own life decisions. Reward good actions versus financially punishing them. The current government debt and pseudo-socialized healthcare system is economically unsustainable. 

7. Motivating the individual remains elusive if there is little or no incentive (See number six above). Patient compliance remains a huge factor in sickness and wellness. Think of the diabetic that doesn't watch carb intake, is overweight, doesn't take their meds. Ditto for the patient with heart disease who still smokes, is sedentary, and takes their medication wantonly. Anything given away for free or nearly free loses its value. 

Take away: Work at keeping yourself healthy and you will decrease your healthcare costs. It's like turning a light off in a room when not in use to decrease your electric costs.

Next issue we will autopsy pharmaceutical and device costs in our system. 

Comments? Email Sid at issueautopsy@blogspot.com

The end of week happy story. After all, everyone needs a smile.

Frankie the Miracle Cat

There are dog people and there are cat people. Cat owners are staunchly cat and sometimes anti-dog. Comments like, "My cat is smarter than a dog and can take care of herself. I don't need to spend as much time caring for her as you do taking care of your dumb dog." Dog people are, well...dogmatic, "My dog is interactive, kind and smart. You don't see any helper cats out there." Now anyone who knows my wife, myself and our three dogs understands we are both animal and dog people. Definitely dog people.

It was a morning cold, dark and wet, a typical season changing October day with rain, sleet, and the occasional snow flake portending winter's arrival. The type of day where it is better staying in than going out. Work forced my wife out in this miserable weather. She departed for work and as routine I watched for the vehicle exiting our driveway to the road. Not seeing that mundane, yet essential event my phone lit up indicating her incoming call. "Will you come out here?" she queried. Certainly not surprised and by now conditioned to so many unplanned events I scurried outside. 

Unsure of the situation I popped out the garage door and rounded the corner quickly. My wife stood halfway between the car and me with a small light colored object in both hands. "She was under the car and followed me. Can you take her?" The fuzzball was a kitten. With no choice, I replied the only way possible, a simple, "Yes." I put the kitten down only to witness her scramble after my wife walking back to her car. Running after the little dynamo I scooped her up, commenting, "She seems to have bonded to you." My wife smiled, "I'm not sure what we should do with her." Translation: "Think we might keep her?"

"I'm in trouble. I know what happens next," I thought anticipating another rescue animal. "Let's see what happens and I will take her to the shelter later if she is still around."

The kitten's boney body easily fit into my two hands. Clearly she needed food so I placed her outside the back door, retrieved some dog food, and fed her (I know, dog food, but I remain fiercely protective of my sardines to this day.). By that time another kitten, same type coloring but slightly larger arrived for the handout. I placed the food for their eager appetites and went inside planning to recheck on them in fifteen or so minutes. After a short time I rechecked the kittens. They were gone. Honestly, I was not too upset. What would we do with a cat and three dogs including one that kills cats on sight (She has good reason but that is another story.)? Plus there were multiple out buildings including an old barn. "Plenty of shelter," I reasoned. 

After an hour my conscience tap danced on my reason. I felt guilty. My wife was under the premise I would take this animal to the shelter and now I couldn't find the kitten. The weather changed for the worse as a biting wind added to the cold, damp day when I went outside looking for the kitten first circling the house slowly, then the barn, then some of the other buildings. No luck. Wilbur Bud our chocolate lab who has a great nose accompanied me as I repeated this process four times that day with the same results. I even added canine reinforcement with KT our other chocolate lab who can retrieve admirably also. Each time we came up empty my conscience stomped my rationale hard, "When you have a chance to do something good or helpful, don't wait." 

The arrival of my wife that Friday evening and the day's cat search recap left us both scratching our heads as to the kitten's whereabouts. Bringing in the dogs prior to bedtime, my wife ventured onto the back deck. All three dogs entered first then she followed with the kitten in her arms. "Where did you find her"? I asked as surprised as she with this development. "She walked up the steps when I was calling the dogs," she held the purring kitten proudly. We were both smitten with this sweet little rascal spurring our diligent work making her a box to sleep and stay warm in the garage where we could assure her safety. "What do we feed her?" I asked. "We have milk and can get food in the morning," my wife answered. 

Next day we purchased cat rudiments such as food, litter box, and litter. As we set up the litter box the seminal dog person question emerged, "How do they know to use this?" asked my wife. In typical "I'm not concerned" style I answered, "I don't know, they just do. We'll set it in the bathroom and see what happens. Easy clean up if I'm wrong." Not finished she asked, "What do we name her?" My solution was quick, "Look at her blue eyes. Old Blue Eyes. Let's call her Frankie." 

Just when we thought it was clear sailing we discovered Frankie harbored worms and not the kind you fish with. She also had a chunk out of her right front paw and no claw at that toe, another smaller piece from her nose, emaciated, and now oozing sero-sanguinous fluid from the corners of her mouth where small hematomas newly emerged. Initially we attributed this drainage to a lost tooth and opted for a "wait and see" strategy. We spent another nasty, wet fall day inside taking turns holding Frankie incorporating her into the "pack". The dogs were fine, even Sophia the cat killer. Always intuitive, she seemed to sense Frankie's infirmity, or maybe she didn't loath cats anymore, or maybe she smelled our scent on the animal and felt our angst. 

Zero dark thirty Sunday morning and the sero-sanguinous drainage was now a dark, bloody, five or six cubic centimeter non-coagulated puddle in front of Frankie's cat bed in the bathroom. She lay listless, not purring when touched. "She's bleeding now," my frustrated wife stated. "She's dying," I softly lamented. My wife was already finding the emergency vet as I peered at her. Amazing how fast she can work an iPhone. She trundled the cat, I warmed the truck and we headed off praying this little animal, this kitten we fell in love with so quickly, would live. 

We knew Frankie had a coagulopathy, a blood clotting disorder. But what caused this? Apparently she ingested one of the older anticoagulant rat poisons placed many moons ago either by eating an animal that ingested that compound or eating the poison bait itself. "So what are our choices with her care?" my wife asked the vet. "Well her CBC is borderline transfusion need. It's a bit tenuous now. We should keep her. How far do You want us to go?" Knowing this type situation intimately we both answered, "No heroics. What is reasonable and prudent." Needless to say Frankie stayed at the emergency animal hospital. where the vet techs dropper fed her hourly racing to fluid replace the animal and keep up with the blood loss. Vitamin K every four hours was given to reverse the anticoagulant similar to what we do with people on coumadin who require reversal. "You may call me anytime to see how she is doing," the vet offered. 

What an ugly ride home. "It will be miraculous if she lives," I prepped my wife. "Miracles happen," she confidently retorted. We waited. We worried. We prayed for the little bugger. How did she wiggle her way into our lives so quickly? She showed up at our door, we took her in and assumed responsibility for her care. It was expensive (Don't ask.), impractical, and downright inconvenient. Yet here we were, absolutely concerned for this critter. That afternoon we called the vet for an update. The situation remained bleak. A second call that evening brought a slight momentum turn in Frankie's life battle. The instructions were to pick her up tomorrow morning as there was nothing more the vet could do. By 6:30 am the next morning she looked a bit better, was no longer exsanguinating from her mouth and was not as listless as twenty-four hours prior. I carefully carried Frankie to the car in her cat bed with instructions for more vitamin K administration and also checking her stools for evidence her deworming succeeded. 

Today Old Blue Eyes thrives with our pooches. Actually, she acts rather canine like. Frankie comes when called by name. When the dogs are commanded to sit as a group she will lie down near them. She despises being alone and seeks out human companionship, is quite verbal and loves a belly rub. She is gentle, sweet, entertaining. The dogs and she get along famously. Sophia is known to sniff at her, tail wagging, enjoying her little sister. Wilbur Bud and she are fast friends while KT wonders what the fuss is about. My wife and I now are dog and cat people. We also decided Frankie was truly our 'Miracle Cat" and Christmas gift this year. After all, one miracle so many centuries past deserves another one today.

State Relationships Between Political Affiliation and Financial Condition

Welcome to Issue Autopsy's debut. Issue Autopsy is a different concept in news analysis, topic discussion, self directed education and public discourse. As such, bear with us as we improve and evolve the Issue Autopsy site based on participant input.Today's dissection: Is There a Relationship Between Political Affiliation and Financial Condition? From our peripheral vision we see the ridiculous US Presidential election is both over and grossly expensive. Who thought the auction to be US President would cost over $1,000,000,000? Our unfocused gaze is daily diverted to so much nonsense, violence and political shenanigans locally, nationally and globally. Let us focus on something that directly affects each of us who works to put food on the table: Your individual state’s financial ability to pay bills due in the next 30 to 60 days defined as cash solvency. States with positive cash solvency can meet their near term bills. States with negative cash solvency cannot and must usually borrow to pay near term bills. The chart below was compiled from George Mason University and shared from the DailyReckoning.com financial analyst Jody Chudney. In the graph positive numbers are good and negative number are not. Blue bars delineate Democrat voting states and Red denote republican voting states:

George Mason University also analyzed long term cash solvency examining the full balance sheet, which includes assets like government owned land and buildings, long-term liabilities like pension funding and debt issued for funding projects. Here’s the graph:

Another way to see the financial condition of your state is examining the next graphic, which depicts where each state was ranked by George Mason University in terms of overall financial condition. The darker the aqua green the better the financial condition. Orange is bad and dark orange is the worst: 

Now lets correlate the above map with the map below depicting the 2016 presidential election from the University of Michigan:

The correlation is telling.There are some swing states such as Pennsylvania who voted opposite their typical party affiliation, in their case voting Republican instead of their usual Democrat. The states with the worst financial conditions can be traced to many sources. One of the major source is underfunded state employee pension plans and benefits. How long will, or can any of the states maintain current state pension payouts before driving out companies and their employees? On the current individual state's spending trajectories we will find out sooner than most people think. Consequently, like it or hate it, the taxes from legalizing marijuana will go a long way to kicking this can down the road, which is why state legalization everywhere is a slam dunk.

Thanks to Canadian Jody Chudney, credit analyst at The Daily Edge (Facebook:@TheDailyEdgeUSA), who first analyzed this political-financial relationship. Also great thanks to the DailyReckoning.com


Thanks for reading.

Welcome to Issue Autopsy. Issue Autopsy is a common sense issue exploration site for an audience who understands they have much more in common as individuals and far less in common as a labelled group. The ability of our readers to think for themselves keeps them objective, critical, avoiding group think and its blind loyalty. They question everything seeking clarity and understanding versus primacy and power. As an independent thinker, Issue Autopsy is for you. Keep thinking. Keep asking. Keep learning.