Sunday, February 28, 2010

Healthcare Reform: What Did We Learn from the Healthcare Summit?

OK, President Obama trooped everybody into Blair House the other day and I don’t know what he was expecting to achieve but unless he’s a lot more cynical than he’s letting on, I don’t think he got what he wanted.

I caught some of the U.S. Healthcare Summit on the evening news and I found it worrying for three principle reasons. First, the theatricality of it all was discouraging. I lost track of the number of copies of proposed healthcare legislation that had been trucked into the conference room by the Republicans to make some point or other. (I wonder if the environmentalists will calculate how many trees were killed to make those points.) Next, the lack of seriousness by many of the participants seemed obvious to me. Yes, there were many pious sounding talking points and other sound bites but too many participants were there only to be seen in front of the cameras. Finally, the lack of any obvious solution or solutions was apparent to me. There seemed to be even a lack of agreement as to what the problem is. Overall, President Obama’s Healthcare Summit, however well intentioned, was a bust in my view.

But what did we learn from this meeting other than how not to throw one of these shindigs? Plenty, in my opinion. However, I will only focus my comments on points which I feel are relevant to the healthcare industry.

One topic that seemed to be coming out as more of an issue is the rising cost of health care itself. One commentator this week said that healthcare costs are rising at twice the annual rate of inflation. (Sorry, I didn’t record the attribution.) Healthcare insurance providers such as WellPoint justify their recent premium increases with this argument. (See ). I’ve also noticed that the media is giving more coverage to this topic as well. CNN’s Dr. Sanjay Gupta had an interesting piece yesterday where he went through the costs of the materials used in his operating room. (See ). As Dr. Gupta shows, seemingly minor objects quickly become very expensive and it all adds up.

Different reasons are given for rising healthcare costs. Some cite the rising cost of malpractice insurance for doctors and hospitals. Others talk about the rising costs of research and development, in particular, the costs and time associated with getting new drugs through the FDA’s regulatory process. Like most things in life, there’s probably no one answer here. All the points noted here and many more not are going to be responsible.

As I’ve blogged recently, I believe that something more fundamental going on here with healthcare in the United States. The validity of the free market system in dealing with these issues is at stake here along with the government’s role in the lives of its citizens. I’ll be blogging more about this as we go through this year.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Sunday, February 21, 2010

Healthcare Reform: What’s Next?

I’m finding the current spate of political infighting over U.S. healthcare reform to be probably the most fascinating that I’ve ever seen. What’s more, I think that we could see fundamental changes in this country unlike any before in our history. Here’s way.

First, healthcare costs are spiraling out of control. I’m not sure why. I know that my primary care physician knows that he’s not profiting. A very competent professional in his early fifties, he claims to be making only 60% of what he expected to when he graduated from medical school. He blames rapacious health insurers. Recent health insurance increases ( ) by some providers were justified because of healthcare costs, such as excessive testing by physicians, were rising. Some providers said that the loss of premium paying customers because of tough economic times caused them to raise the rates of their remaining ones. That kind of beggar thy neighbor (or, customers in this case) never works long term. Interestingly, on last evening’s news, one provider told a correspondent that they were running at a loss and angry about being lumped by a critical President Obama in with firms earning record profits and still increasing rates. My ignorance in this matter doesn’t bother me, I’m obviously in good company. What does bother me is the complete lack of any understanding by anyone as to what the root cause of the problem is. The resources that are consumed here won’t be available to reinvest in the economy.

Next, the growing U.S. national debt is going to limit the government’s options in addressing the problem. Check out the U.S. Debt Clock ( ) to see some really scary numbers. A Federal government unable to afford any sort of healthcare reform, even smaller, affordable, initiatives may find itself thrown back on policy reforms only, or, even marginalized. Worse case, the U.S. standard of living could begin an irreversible decline for the first time in history.

Finally, the coming conflict between free enterprise and the public welfare as represented by a national healthcare policy. With limited resource available, the public will begin to resent for profit organizations (i.e., businesses) taking away monies which could have been used to provide healthcare services. Big Pharma will eventually have to explain why when they use volume purchasing to drive down suppliers’ profits, it’s capitalism, but, when the government tries to do it with prescription medicines it’s socialism.

So, there’s a lot going on here. Unfortunately, no silver bullet exists for this situation. I don’t believe that this is just a simple government funding debate going on here like we’re seen before. We may be seeing some fundamental changes to the American way of life coming out of this. And, the healthcare industry is going to have to figure out how to deal with this.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Monday, February 15, 2010

Healthcare Reform: Where’d It Go?

I’ve been a little distracted lately (busy Holidays, snowstorms, colds) but I stopped the other day and U.S. healthcare reform was gone. Poof! Not there anymore. Now, Larry always kids me (you are kidding Larry, aren’t you?) that when distracted I can miss a lot. But, I must’ve had one heck of a lot better New Year’s Eve than I’d realized.

I went to my usual haunts to see if anyone had any perspective on this. Mike Huckman at CNBC ( ) and Pharmalot ( ) didn’t mention it. (My apologies if they did and I missed it.)

OK, don’t worry, I’m not going to drag this out. I had heard about Scott Brown’s ( ) election in Massachusetts. (Ted Kennedy’s old seat no less.) The irony of that victory has not been lost on me. I wasn’t as much surprised by Brown’s victory as how the national discussion on healthcare reform has practically shut down. Despite some noises from Nancy Pelosi and other supporters, there’s virtually nothing compared to prior to Congress’s late Christmas Eve recess.

What’s going on here? Further, what does it mean for Big Pharma? I’m going to go out on a limb here with my views.

First, the Democrats obviously couldn’t arrive at a consensus within their own party about what healthcare reform was all about. (I’m not going to go into the political missteps that cost them Ted Kennedy’s seat.) There were no killer ideas. What began as a high minded crusade to overhaul healthcare in America became a mad, undignified dash for the finish line replete with all sorts of cloakroom deals to make it all happen. No one had any reason to cross the aisle or to worry about why they hadn’t. I suspect that President Obama is probably relieved that he no longer has the Supermajority for this one. We just don’t have any good ideas to implement major healthcare reform. Consensus on smaller issues like tort reform or health insurance regulation may be possible but that’s going to be it for now. We may see this happen as the November midterm elections draw near.

Next, what about Big Pharma? I don’t think that the current status quo concerning healthcare reform is good for them. The topic isn’t going away. Both sides are going back into their corners to get ready for the next round. Uncertainty prevails. The Tea Party movement will play the role of spoiler this year possibly foretelling what will happen in the 2012 Presidential election. Decisions on future drug development not to mention how capital markets will value these companies are only several of the possible issues here.

I’ll be blogging on this theme for a while. With the Congressional elections coming and the White House trying to find common ground with the Republicans, there will be plenty of good material here.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin