Pharma

Morning Read: Choose primary care, give up $2.5M

Highlights of the important and the interesting from the world of healthcare: Choose primary care, give up $2.5 million: It’s not quite that simple, but $2.5 million is the lifetime earnings gap between cardiologists (who average lifetime earnings of about $5 million) and primary care doctors (who average $2.5 million). To come up with the […]

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

Choose primary care, give up $2.5 million: It’s not quite that simple, but $2.5 million is the lifetime earnings gap between cardiologists (who average lifetime earnings of about $5 million) and primary care doctors (who average $2.5 million). To come up with the numbers, Duke University researchers modeled the lifetime income of cardiologists and primary care physicians between the ages of 22 and 65, taking into account medical school debt, earning potential and the age at which doctors begin earning an income. The numbers once again illustrate why so few med school students choose primary care. To make primary care more attractive, the study’s authors estimated that  primary care doctors would have to receive a $1 million lump-sum payment or have an annual income boost of $100,000.

While that’s unlikely, the solutions to the problem are fairly obvious, if politically challenging. First, adjust reimbursements so specialists make less and primary care docs receive more. Second, whenever possible and practical, use nurse practitioners and other health providers to perform primary care services. But we before we go crying for primary care docs, it’s worth noting some other numbers from the study. Primary care physicians are still doing much better than most of us. That $2.5 million lifetime earnings compares to $846,000 for the average MBA, and $340,000 for the average college graduate.

What’s a “medical cost”? It might seem like a bit of a dumb question, but it’s one that’s extremely important to health insurers and government regulators. The health reform law requires that insurers’ “medical-loss ratio” (the percentage of revenues they spend on medical costs) hit 85 percent in small- and large-group markets and 80 percent in the individual market. Seems straightforward enough, but as always the devil is in the details. Clearly, insurers have incentive to throw every cost they reasonably can into medical-loss ratio, whether those costs have a legitimate medical component or not.

A recent Senate report found that of six major insurance companies surveyed–Aetna, Cigna, Coventry, Humana, UnitedHealth and WellPoint–only Cigna would have met the proposed individual market target in 2009, Politico reports. Further, the report already singled out Wellpoint for shifting costs to increase its medical-loss ratio by about 1.7 percent, which equates to about half-a-billion dollars. One of the shifted costs was for a 24-hour nursing hotline, which seems legitimate and underscores how difficult it will be for regulators to clearly draw lines between what’s acceptable and what isn’t. The first draft of the regulations is due June 1, but expect the fight over what should and shouldn’t be included in medical-loss ratio to rage on for years.

“The death of private insurance”: Mike Turpin, a former insurance executive, has a lengthy and thoughtful take on what he calls “Managed Care 2.0,” which he defines as the era ushered in by health reform. Turpin’s piece attempts to answer the ever-present question “What’s next?” Generally, it’s not pretty. He suggests that because Managed Care 2.0 didn’t do much to solve the problems of costs, its greatest value may be in bringing about another new world, essentially a second age of 21st Century reform to address the inadequacies of the first.

The middle class will take it on the chin as they always do.  At this point, we will rally around the cry for affordability.  The pitchforks and torches will once again appear and we will look for a common enemy. It will usher in a new era and it may very well set in motion the next phase of Managed Care–an era characterized by the death of private insurance.

The biggest drugs of 2016: EvaluatePharma, a London-based research firm, projects the top 10 selling drugs in 2016. At No. 1 is Humira, an arthritis drug from Abbott Labs and Eisai, with projected sales of just more than $10 billion. Coming in at No. 2 is Roche’s cancer drug Avastin, with projected sales of nearly $9 billion. Pfizer’s Lipitor, today’s top seller, isn’t on the list since its patent protection expires in June 2011.

Photo from flickr user borman818