The Goose and the Elephant

Brian-KlepperAmerica’s drug and biotech industries are no doubt alarmed by the national firestorm that erupted when Turing Pharmaceuticals raised the price 55 times of its 62 year old lifesaving drug, daraprim. They must worry that CEO Martin Shkreli’s tone-deaf reactions to the public’s scorn could precipitate close scrutiny of broader drug industry dynamics. The last thing pharma wants is a vigorous, in-depth national discussion of pricing, value, what we can afford and how other advanced countries handle drug spending. All this could kill the golden goose.

Seeking distance from the furor, PhRMA tweeted that “Turing Pharma does not represent the values of PhRMA’s member companies.” Then BIO, the biotech industry’s association, rescinded Turing’s membership and returned its dues, the equivalent of booting Turing out of the country club.

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The Case for High Performance Health Care

Brian Klepper

Posted 9/25/15 on The Employee Benefit News Blog

BK PhotoNote to would-be health care reformers: don’t bother trying to drive change through policy, because you’re vastly outgunned. The industry you would reform owns Congress and the legislatures.

Nearly every substantial health care organization spends lavishly to ensure that regulation favors them. In 2009, the year the Affordable Care Act was formulated, Congress accepted more than $1.2 billion in campaign contributions presumably in exchange for influence over the shape of the law. Given that the context is currently a $4 trillion (and skyrocketing) annual health care spend and that the impacts of their lobbying will resonate for decades, the  costs were nominal and the potential for return high. Unless we can galvanize the much larger non-health care business community to act in its (and our) interests, we don’t have a prayer. Continue reading

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Will Specialty Drug Pricing Be The Straw?

Published 5/27/15 in Employee Benefit News

ALP_H_BK_0010Over the next few years, drug manufacturers will release a host of new drugs that are more complex and, in many cases, more effective than we’ve had access to in the past. There will be better solutions for common problems, and new solutions for uncommon ones. Specialty drugs, many of them “precision therapies,” will offer tremendous promise for better health outcomes across the breadth of human health and treatment.

Not surprisingly, most of these drugs will have breathtaking price tags, often a high multiple of conventional drugs. Specialty drugs are an exploding growth industry, with spending rising almost 20 times as fast as conventional drugs. Unless something changes, in just another five years we’ll likely spend more on specialty than non-specialty drugs. Or, for that matter, on doctors.

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Marcus Welby, Dr. House and the Wizard of Oz

Elaine Waples

At a recent dinner party my husband and I joined two other couples in a lively discussion on the frustrations of American health care. We rounded up the usual suspects: cost, quality, access, politics, and broken systems. At some point the conversation took a subtle turn and we began to talk about the doctor-patient relationship.

Before long, I offered a comment that I probably wouldn’t have made before my last two years of serious doctor-going. I said that some patients want their doctors to be a combination of Marcus Welby, House and the Wizard of Oz.’  They want a great bedside manner, a brilliant diagnosis, and a miraculous solution. And I suspect that doctors want their patients to be compliant, accept a possible imperfect outcome, and have enough insurance to cover it all.

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Elaine-Waples Klepper (Sept. 3, 1946 – Nov 22, 2014)

SmilingOn Saturday, my precious wife Elaine finally succumbed to a long, protracted battle with  cancer. Below is her obituary, and I’ll also re-run several wonderful health care articles that she wrote over the past few years.

Here is her obituary.

Elaine Waples-Klepper was lost to us on the morning of November 22nd after a 55 month struggle against primary peritoneal (ovarian) cancer. Never, in the marathon of living with this disease, was she pessimistic, self-pitying or given to false hopes. She was reliably pragmatic and believed that living well created the most favorable environment for her care. She remained unfailingly buoyant, witty, graceful and fully engaged in life.

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Will Employers Favor Private Exchanges Over Coverage Sponsorship?

Brian Klepper

Originally posted 10/17/14 on The Health Affairs Blog

BK 711Over the past couple years, health care exchanges probably have consumed more of corporate benefits managers’ time and psychic energy than any other topic. An outstanding question is whether the rank and file of American businesses will drop the hassle that employer-sponsored coverage represents, or default to private exchanges.

Private exchange offerings typically move employees from their companies’ previous self-funded health plans to fully-insured individual arrangements, purporting to offer more flexibility and choice that can adapt to the wide-ranging needs of employees and employers, while creating a more competitive health plan marketplace.

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Developing a Coordinated, Considered Response to Predatory Health Care

Brian Klepper

Posted 9/21/14 on the NBCH Newsletter Blog

ALP_H_BK_0010In today’s New York Times, Elizabeth Rosenthal describes the growing and egregious over-treatment and overpricing practices by physicians and health systems, abetted by health plans.

The excesses detailed in this article are at the core of our national health care quality and cost crisis. The best solutions are collaborative, considered actions by group purchasers, potentially the most empowered of health care’s stakeholders.

When predatory anecdotes like these come to light, the benefits managers – or better yet, the CFOs – of local employers, unions and governmental agencies should immediately call the health plan and demand that the health systems, physicians and other providers involved be removed from the provider panel. (Small communities held hostage by a few dominant health care players are a separate topic that I’ll address soon.)

As Tom Emerick, former VP Human Resources at Walmart has stated repeatedly, health care will not improve until purchasers demand different behaviors from health care vendors, focusing business on organizations that facilitate high quality care at reasonable cost, and publicly avoiding those that do not.

This is a serious issue that demands a coordinated response. It is at the top of NBCH’s agenda. Join with us on this.

Brian Klepper is the CEO of the National Business Coalition on Health.

Posted in Analytics, Conflicts of Interest, Health Care Cost, Medical Management, Physicians, Policy/Law/Regulation, Quality | Tagged , , | 6 Comments

How Business Can Save America from Health Care

Brian Klepper

Published 6/09/14 in Employee Benefit News

ALP_H_BK_0010One of America’s most enduring mysteries is why the organizations that pay for most health care don’t work together to force better value from the health care industry.

We pay double for health care what our competitors in other developed nations do, but studies show that more than half of our annual health care spend – equal to 9% of GDP or our 2012 budget deficit – provides zero value. Every health care sector has devised mechanisms that allow it to extract much more money than it is legitimately entitled to. Health plans contract for and pass through the costs of products and services at high multiples of what any volume-based purchaser can buy them for in the market. Medical societies campaign for excessive medical service values that Medicare and commercial payers base their payments on. Hospitals routinely over-treat and have egregious unit pricing. There are scores of examples.

Decades of these behaviors have made health care cost growth the most serious threat to America’s national economic security. Medicare and Medicaid cost growth remains the primary driver of federal budget deficits. Over the past decade, 79% of the growth in household income has been absorbed by health care. Health care’s relentless demand for an ever-increasing percentage of total resources compromises other critical economic needs, like education and infrastructure replenishment.

Health care costs have been particularly corrosive to business competitiveness. Three-fourths of CFOs now report that health care cost is their most serious business concern. Commercial health plan premiums have grown almost five times overall inflation over the past 14 years. Businesses in international markets must overcome a 9+ percent health care cost disadvantage, just to be on a level playing field with their competitors in Australia, Korea or Germany.

The health care industry’s efforts to maximize revenues have been strengthened by its lobby, which spins health policy to favor its interests. In 2009, as the Affordable Care Act was formulated, health care organizations fielded eight lobbyists for every Congressional representative, providing an unprecedented $1.2 billion in campaign contributions to Congress in exchange for influence over the shape of the law. These activities go on continuously behind the scenes and ensure that nearly every health care law and rule is structured to the industry’s advantage and at the expense of the common interest.

Health care is now America’s largest and most influential industry, consuming almost one dollar in five. Only one group is more powerful, and that’s everyone else. Only if America’s non-health care business community mobilizes on this problem, becoming a counterweight to the health care industry’s influence over markets and policy, can we bring health care back to rights.

In every community, employers represent loose groupings of lives covered by health benefits, each with different approaches and results on health outcomes and cost. There are few standards and divergent opinions – mostly based on ideology rather than evidence – on plan structure, service offerings, cost sharing, incentives and many other variables.

Business health coalitions represent the opportunity for health care purchasers to collaborate and become more consistent. They can move collectively toward best practice and market-based leverage, with better health outcomes at lower cost. Coalitions like those in Savannah, Ga.  and Madison, Wisc., have shown impressive, measurable impacts. Many others could benefit from shared access to advanced risk management capabilities that can change how benefits and health care work.

Another critical missing component has been the direct involvement of business leaders. Many senior executives may not fully appreciate health care’s often blatant inappropriateness, and possibly haven’t thought through the scale of financial impact on their own businesses and the larger economy.

It will take businesses collaborating, harnessing their immense purchasing power, to disrupt health care’s institutionalized mechanisms of excess. By leveraging their collective strength, purchasers can convey that health care profiteering will no longer be tolerated, and that America’s economic success is dependent on the right care at much fairer pricing.

These goals are worth pursuing for our employees and their families, our businesses and the country. And we call on America’s employers to join us.

Brian Klepper, PhD, is chief executive officer, National Business Coalition on Health, a non-profit membership organization of purchaser-led business and health coalitions, representing over 7,000 employers and 35 million employees and their dependents across the United States.

Posted in Analytics, Benefits, Brian Klepper, Conflicts of Interest, Health Care Cost, Market Dynamics, Medical Management, Policy/Law/Regulation, Politics | Tagged , , | 5 Comments

Would A Single Payer System Be Good For America?

Brian Klepper

ALP_H_BK_0010berwick_donOn Vox, the vivacious new topical news site, staffed in part by former writers at the Washington Post Wonk Blog, Sarah Kliff writes how Donald Berwick, MD, the recent former Administrator of the Centers for Medicare and Medicaid Services and the Founder of the prestigious Institute for Healthcare Improvement, has concluded that a single payer health system would answer many of the US’ health care woes. Dr. Berwick is running for Governor of Massachusetts and this is an important plank of his platform. Of course, it is easy to show that single payer systems in other developed nations provide comparable or better quality care at about half the cost that we do in the US.

All else being equal, I might be inclined to agree with Dr. Berwick’s assessment. But the US is special in two ways that make a single payer system unlikely to produce anything but even higher health care costs than we already have.

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Klepper Interview, Midwest Business Group on Health Conference, Chicago, 4/30/14

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Klepper Interview – World Health Care Congress 4/07/14, DC

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Getting Beyond Fee-For-Service

Brian Klepper

Posted 12/02/13 on Medscape Connect’s Care and Cost Blog

ALP_H_BK_0010The catchy title of a recent Harvard Business Review Blog post, The Big Barrier To High Value Health Care: Destructive Self-Interest, suggested that the Institute for Healthcare Improvement (IHI) is forging arrangements that can overcome fee-for-service reimbursement’s propensity to drive excess. As the honest broker, IHI could advocate for arrangements of mutual self-interest based on the right care, better outcomes and less money. Employers and unions would get lower costs, with improved health and productivity. Health systems and health plans would win more market share (at their competitors’ expense), realizing longer term relationships that could facilitate sustainability as market forces intensify.

The substance of IHI’s description was less satisfying, though. Their principles – common goals, trust, new business models, and defining roles for competition and cooperation – are obvious ingredients in any workable business arrangement. But the authors never talked about the money. That left plenty of room for skepticism by those of us who have heard more than one CFO ask, “Why should we take less money until we have to?” What, exactly, is the incentive for health care organizations to moderate their care and cost patterns?

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Predatory Health Care

Brian Klepper

Posted 11/17/13 on Medscape Connect’s Care and Cost Blog

ALP_H_BK_0010Recently I was asked to intervene on behalf of a patient who, trapped by circumstance, was paying off an enormous bill for a lithotripsy procedure. What I uncovered wasn’t news, but it drove home how egregious the current system can be, why it so badly needs to be fixed, and how the Affordable Care Act (ACA) helps move us in the right direction.

The patient had health insurance through her husband’s job. But it was cancelled just after the hospital validated it, because the employer failed to pay the premium. The procedure was performed, and the patient was charged as “self-pay.”

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Posted in Analytics, Benefits, Conflicts of Interest, Health Care Cost, Policy/Law/Regulation, Reform | Tagged , , , , , , | 7 Comments

Facilitating Interoperability

October 18th, 2013

Cross-Posted 10/18/13 from The Health Affairs Blog

BK 711Health Affairs report on health information interoperability by staffers of the Office of the National Coordinator for Health Information Technology (ONC) provides a good enough summary of the situation. But it also is not news, and falls under the Bob Dylan Rule: You don’t need a weatherman to know which way the wind blows. From the article: “In general, limited interoperability across vendors, low motivation to share information in a fee-for-service payment environment, and the high cost of interfaces remain substantial barriers to widespread health information sharing.”

Two difficult but solvable structural problems block our exchange of health care information. The first is the “transport protocol.” Most health care data transport approaches lack the strong privacy and security safeguards that other industries now consider essential. The same industry that is moving toward clinical applications of mobile health, genomics, and nanotechnology still primarily relies on cumbersome, expensive faxes to transmit clinical information between organizations.

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A Better Way To Manage Care and Cost

Brian Klepper!comment=1 

Posted 10/10/12 on Medscape Connect’s Care & Cost Blog

When an employer sits down with his health care partners – broker, health plan, physician, hospital, drug and device firm, health IT firm – everyone but him wants health care to cost more, and each is typically in a position to make that happen.

Lynn Jennings, CEO, WeCare TLC 

ALP_H_BK_0010A new class of health care management organization is emerging that thrives by taking advantage of health care’s rampant and institutionalized waste. These firms mine the market dysfunction that has developed over decades, which will almost certainly yield enough fuel to drive a new way to manage care and cost.

The founders of these organizations have deep health care experience, and they understand the mechanisms of excess. More important, the ones I’ve met are mission-driven, with a deep sense of outrage that health care’s exploitation has become so pervasive and overt. So their businesses are purposeful.

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Posted in Analytics, Benefits, Conflicts of Interest, Health Care Cost, Market Dynamics, Medical Management, Physicians, Policy/Law/Regulation, Politics, Quality, Reform | Tagged , , , , , , , , | 4 Comments