Players: Pharmaceutical & Medical device makers

Think back. Think way back. Think 1980s way back. Think windfall profits tax. Pharmaceutical & medical device makers are to medical costs what petroleum companies were to gasoline prices.

The idea, 'windfall' was based on the prohibition of taking any wood from the king's forest, unless you were to come across a tree laying on its side that was blown over by the wind hence the word, windfall.

"...Amgen posted average growth of 13 percent per year, of the past four years. That's 52 percent profit increase over four years!!!"

We've heard all the banter about how much money they pour into research and development. Anecdotally this sounds good, but why have their take-home corporate profits sky rocketed parallel to overall health care costs? For example, our friends at Amgen posted average growth of 13 percent per year, of the past four years. That's 52 percent profit increase over four years!!!

Also, intellectual property protection (patent protection) is essential to foster research, but 17 years is a bit long in this economy.

Solutions:

• Remove practitioners' conflicts of interest. If you are a practitioner you may not directly or indirectly own independent labs, diagnostic facilities, or pharmaceutics. (Mutual funds ownership are probably OK).

• Remove insurance co. auditors' conflict of interest by eliminating contingency fees.

• Increase flat rates to primary practitioners, increase patient deductibles and lower premiums proportionally. When patients are paying with their own money, they tend to look at the costs more carefully. Moreover, a higher deductible means less involvement and administration from the insurance company. This will take some doing to fine tune the optimal balance.

• Require practitioners to provide a written estimate. Auto mechanics are required to provide a written estimate prior to performing a service. Why not practitioners ?

• Require practitioners to put treatment plans in writing and give a copy to the patient. This sort of removes the excuse of said patient not knowing what he/she the patient was suppose to do, see a psychotherapist or do perform daily exercise.

• Educate citizens about preventative medicine. And how to "listen" to their bodies. Have you ever seen the Show "I didn't know I was pregnant?" I don't get it ? Then I've never been pregnant and oh yeah I'm a man. On the opposite end of the spectrum, don't run to the doctor at the first sign of a sniffle, just because you want that "professional" drama and attention... Wait until you have X symptoms for Y days before consulting over the phone with your primary practitioner.

• Educate practitioners about cross functional coordination (medical, psychological, chiropractic, etc.) and patient misconduct (bullying the doctor/shopping for meds antibiotics, etc.).

• Impose a penalty on patients for making poor health choices and failing to follow reasonable prescribed treatment plans. Oversized people have to buy two airplane seats, why not link personal costs based on factors within your direct control. (Did you follow your treatment plan? Did you see your psychotherapist ?)

• Enforce existing false/misleading advertising laws. How many more weight loss pills or bowel cleansers do we really need? (Most of these prey on the desperate and ignorant).

"Streamline and expedite the FDA approval process for new medicines or devices."

• Reevaluate the existing intellectual property laws to determine if the period of protection is appropriate. Streamline and expedite the FDA approval process for new medicines or devices.

• Remove tort attorney's contingency fees. Bill by the hour like any other self-respecting professional. Build a safety valve in the litigation process to better determine actual injury and the party of proximate cause before too many defense costs are incurred. Evaluate whether a monetary cap for pain and suffering judgments is appropriate.

"Build a safety valve in the litigation process to better determine actual injury and the party of proximate cause before too many defense costs are incurred."

All of the above really address the incentives (or disincentives) that drive the behavior that have led the current state of the health care "system". None of the above addresses the operational efficiency of diagnosing and treating patients. (That's sort of up to the practitioners and not really within the domain of public policy.)

Jefferson Pinto is a retired CPA, holds an MBA from one of the finer accredited universities in this country, and is the VP of corporate operations for his day job. This email address is being protected from spambots. You need JavaScript enabled to view it.© 2009,OjaiandVenturaVIEW.com

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SOURCE: VIEW Issue 16, Feb. 2009
LINK: Classic VIEW Website