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Morning Read: In defense of death panels

Highlights of the important and the interesting from the world of healthcare: Defending “death panels”: The Sarah Palin-inspired “death panel” accusation was all over the news last summer and threatened to derail health-reform efforts. With reform looking likely to pass, the death panel controversy has come and gone, and that’s a bit of a shame […]

Highlights of the important and the interesting from the world of healthcare:

Defending “death panels”: The Sarah Palin-inspired “death panel” accusation was all over the news last summer and threatened to derail health-reform efforts. With reform looking likely to pass, the death panel controversy has come and gone, and that’s a bit of a shame because it means Americans lost out on a chance to have a serious discussion about palliative care. Guest-writing at KevinMD, one Dr. Grumpy aims to bring about the discussion that we missed on last summer. Dr. Grumpy relays the story of a comatose, cancer-stricken woman who’d been through all sorts of treatments and had no hope of regaining any semblance of a normal life. Though numerous doctors had told the woman’s husband of this, the husband insisted on continuing treatment, even with the  cost potentially running to $1 million. All to treat a woman who basically had no hope of anything better than a miserable existence.

Dr. Grumpy and colleagues met with the woman’s family, explaining that all care was futile, and all they were doing was prolonging the suffering of a loved one. The family promptly told the doctors they were being “too negative” and moved the woman to another hospital. That prompts Dr. Grumpy to ask some tough questions that require answers most of us are afraid to confront:

But for all the controversy over the phrase “death panels”, ask yourself this — are they so unreasonable? In a case like this, should, say, a panel of 3-5 certified doctors in oncology, with no ties to the patient or the insurance, objectively review the the data and say “Stop this madness”? Or maybe determine further treatment would be beneficial?

What does reform mean for healthcare investing? There’s no better way to begin thinking about that question than to get opinions from top venture capitalists and private equity investors, and that’s what peHUB did. As one would expect, it’s generally a mixed response, and one that I suspect was heavily influenced by each investor’s own ideology and politics (not that there’s anything wrong with that.) One of the more interesting responses comes from Dr. Jeffrey Jay of Great Point Partners, who slams the overhaul bill’s cost-cutting efforts and says the changes will result in patients “flooding” emergency rooms since they can’t get doctor’s appointments.

Despite this, Jay says we may be entering a “golden age” of healthcare investing. Why? He simply cites the massive increase in demand for healthcare services and goods that’ll come in part from insuring an additional 32 Americans. With all that extra cash flying around (a situation exacerbated by the overhaul’s weak cost-control measures, in Jay’s opinion), it’ll be a field day for investors who make the right choices, Jay says. It’s just a question of picking the companies whose goods and services will receive a bump in demand from the expansion of health care in the U.S.

Reform’s winners and losers: While the implications, effects and aftershocks from health reform 2010 will likely take years to fully appreciate, that hasn’t stopped many pundits from compiling a list of winners and losers. The big number here is 32 million— that’s the number of currently uninsured Americans who are expected to get insurance coverage as a result of “Obamacare,” though not all of them will end up getting private insurance. Nonetheless,  reform should bring millions of new customers for health insurance and drug companies, so consider those two industries big winners when it comes to obtaining new business. Just as important to insurers, reform legislation contains no government-run “public option,” a huge win for insurers that means they won’t be facing a new source of potentially formidable competition.

Drug companies will have fork over about $85 billion over 10 years via a tax on drug sales, yet the industry likely came out ahead. Big Pharma defeated a provision that would’ve shortened the amount of time that biotech drugs are protected from generic rivals, and another that would’ve barred deals between brand-name and generic drugmakers that keep generics off the market.

Medical device companies didn’t fare quite as well, as they’ll be hit by a tax that aims to raise $20 billion over 10 years. Device makers also fear that they’ll be forced to cut prices as hospitals struggle to keep costs down.

Hospitals will benefit from an influx of insured customers, which will help cut down on the amount of uncompensated care they provide. However, many of those customers will be on Medicaid, which pays less than the cost of care, many hospitals claim. Further, hospitals agreed to accept reduced Medicare payment rates, a move that will surely harm their revenues. Still, the American Hospital Association supported the health overhaul, so you have to assume hospitals figured they’d make it out ahead. Either that, or they decided things could be much worse, so they better jump on board.

Photo from flickr user Bruce Tuten