Healthcare in a Minute – January 2017

By George W. Chapman

Merger Mania to Intensify

The trend will continue at an accelerated pace in 2017 as both hospital systems and commercial insurers engage in “bigger is better” business strategy. As the chess pieces move around, the ultimate impact on consumers will most likely differ from market to market. On one hand, bigger really is better for consumers if consolidation results in improved services, access, outcomes and lower prices due to standardization and economies of scale. On the other hand, bigger is worse for consumers if consolidation results in no improvement in services, access, outcomes or prices due to lack of competition  and choice. The Department of Justice looks at all mergers and remains vigilant on behalf of consumers. When bigger is better, rural consumer areas tend to benefit the most, but suffer disproportionality when bigger is worse.

Trump Health Appointees

Tom Price, former orthopedic surgeon turned congressman from Georgia, will head Health and Human Services. He has been an outspoken critic of the ACA and advocates its repeal. The American Medical Association has been guarded about its approval/endorsement of Price as physicians seem split 50/50 over the ACA and are frankly tired of all the volatility and wrangling. For inexplicable reasons, Price is in favor of privatizing Medicare, which works well and increased only 1.7 percent in 2015. Seema Verma, former CEO of Seema Verma Consultants, will head CMS. Interestingly, Verma was instrumental in the implementation of Indiana’s expanded Medicaid program (ACA) while Mike Pence was governor.

ACA Repeal and Hospitals

Proving there is far more at stake to repealing the ACA, the American Hospital Association projects a collective loss of $166 billion on net income should the ACA be repealed without an adequate replacement due to the loss of insurance coverage by the 20 million people who receive coverage via the ACA.

Healthcare Ads

If it seems like every other ad on TV is either for a drug, hospital or insurance plan, you’re not far off. The healthcare industry is solidly entrenched among the top 10 industries when it comes to advertising, according to Kantar Media. Advertising in healthcare totaled almost $10 billion in 2015, which was an 11 percent increase over 2014 spending. Drug advertising accounted for $6.6 billion, hospitals and healthcare systems $2.3 billion and insurance $1.1 billion. The favorite medium was TV where the industry spent over half of the $10 billion. Other media like magazines, digital, newspapers, billboards and radio combined for the remainder of ad spending. So, when pressed, where does the average person turn to for health information? The Internet. According to a survey by Kantar media, three out of four of us research health issues on the Internet.

How Washington Works

Just how things get done (or not) in Washington is exemplified by how the “21st Century Cares Act” (TCCA) became law. Most agree the current heroine epidemic was created largely by drug manufacturers spending billions to get the medical community to prescribe their opioids. Four of five heroin addicts started out on an opioid like OxyContin. The TCCA commits billions of tax dollars to medical research and $1 billion to states to combat heroin and pain killer addiction, which all sounds good enough. But a bill this size would never see the light day without the blessing of the various lobbyists on the hill, most notably the drug lobby. A total of 1,455 lobbyists representing more than 400 companies made their client’s views known. As a result, the bill includes reductions in regulations and protocols which the drug industry found too restrictive and costly. While there was broad support for the bill on both sides of the aisle, and from the president, critics see the “compromise” with the drug industry as a blow to consumers who are protected by the protocols and regulations. The FDA will be allowed to expand the use of a previously approved drug, known as going off label, based solely on anecdotal rather than scientific evidence.

Life Expectancy

A recent article in the Wall Street Journal summarized a report by the Centers for Disease Control and Prevention. There was no change in the average life expectancy of all Americans born in 2014 vs 2013. There was a very slight decline in the life expectancy of a white males born in 2014 (78.8) vs 2013 (78.9). Life expectancy is based on the year you were born. The report noted that since 2000, white middle-aged Americans are dying at a rising rate largely due to suicide, drug/alcohol abuse and chronic liver disease. The US ranks only 53rd out of the top 100 countries in life expectancy. Monaco leads the way at 89. We are behind just about every economically developed country like Italy, Canada, Spain, Sweden, Germany, United Kingdom, France, etc. The good news? We have come a long way. World-wide life expectancy in the Bronze Age, around 3000 BC was 26. In classic Rome times, around 400 AD, it was 20-30. In medieval times, around 1500, it was 35. Just 116 years ago, in 1900, life expectancy world-wide was 31. It has more than doubled to 67 in 2010.

See Your Doctor

The citizens in those 52 countries that rank higher than the US in life expectancy have more contacts with their physician’s practice per year than the average American does. In Japan, for example, they average 13 contacts a year. A “contact” can be through a face to face visit, a phone call, social media, patient portal, telemedicine. In the US, we average only four contacts a year. While there can be plenty of reasons why, many feel the biggest reason is simply cost. As premiums spiral upwards, so do deductibles and out of pocket expenses which makes most people think twice about contacting their physician and even put needed treatment off. The grave consequences of being out of touch with your physician are obvious. Make increased “contact” with your physician a resolution for 2017 and live longer.

George W. Chapman is a healthcare consultant who works with hospitals and medical groups. He operates GW Chapman Consulting based in Syracuse. Email him at