Just a few quick hits while I wait for my allergy medication to make me functional:
- Someone should invent/widely disseminate a machine readable card which contains basic demographic and medical history on it. I took my daughter to the orthopedist yesterday (no major damage, two little bones broken in her wrist, she’ll be good as new by August), and before the appointment, I had to fill out paperwork. Before I turned it in, I counted the number of times I had to write down her pediatrician’s name, phone number and address. It was six times on five seperate forms. That is ludicrous. It is the same data element that should be pre-printable. What I envision is a chip and pin credit card that slides through a reader so those six data areas are pre-populated and I just have to promise to turn over my house for treatment. Writing things down repeatedly invites error, and transcribing the data into the practice’s electronic medical records is a mindless, thankless job that could be automated.
- This is fascinating from Bloomberg:
Theranos Inc., the health startup that performs many routine tests with only a fingerprick’s worth of blood, plans to announce for the first time that it will become the preferred lab-work provider for a health insurer.Capital BlueCross, a Pennsylvania insurer that covers 725,000 consumers…. Theranos has automated many of the processes in blood testing, resulting in reduced labor and other costs,
Theranos is claiming that its testing system costs half of the typical Medicare fee for service rate. This would be a big deal on a per unit basis. My question on the downside is that we are already probably over tested as a population, would cheaper and faster testing lead to even more testing so the cost per test decreases, but the number of tests ordered per patient episode increases to cancel out the cost savings?
- The Aetna-Humana merger will probably be approved with significant conditions. My personal bet is that Humana Medicare Advantage will need to be spun out as the market concentration is too high:
Aetna and Humana are in nine of the same states in Medicare Advantage. Combined, they would have market share of 88 percent in Kansas, 80 percent in West Virginia, 58 percent in Iowa and 51 percent in Missouri.
If Medicare Advantage is spun out to a different company, then the entire business case for the merger gets a whole lot weaker. There are some efficiencies to eventually be gained by consolidation. If I worked at Humana in my present position, I know I would have two years worth of work on system integration, but after that my current job would be redundant. But the types of efficiencies that can be gained (marketing, strategy, system archi-torture etc) aren’t huge efficiencies. They don’t justify a $37 billion take-over bid. The real gain for Aetna would be market power and market consolidation. In regions where it would bump Aetna from a minor player to a mid-size player, this is probably a net public gain as a slightly more consolidated insurance industry could get better provider payment rates. However in regions where Aetna goes from first among equals to first, this is a massive public loss as Aetna’s management will squeeze the market as hard as they can to capture all relevant consumer surplus for self and shareholder enrichment.
If the FTC conditions are significant spin outs on a regional or state basis wherever the HHI index under a merged entity passes 25% or 30% in each market segment (group, individual, Medicare, Medicaid etc), the deal makes no sense from Aetna’s point of view.